House prices fell by 0.5% in June to an average of £157,713, Halifax announced today.

Over the second quarter of the year prices fell by 1.9%, the smallest quarterly fall since the first three months of 2008, the lender said, and the year-on-year decline was now at 15%.

Martin Ellis, housing economist at Halifax, said there had been some evidence of a "modest improvement in sales activity" as the number of loans taken out to purchase homes rose for the fourth month in a row in May.

"Improvements in affordability and low interest rates have stimulated housing demand. This, together with a low level of properties available for sale, has helped to stabilise activity and reduce the underlying rate of house price decline in recent months," he said.

However, he added that despite "encouraging recent signs of improvement" in the housing market the outlook for the UK economy remained uncertain. "Overall, we expect to see a continuing mixed pattern of monthly house price rises and falls over the remainder of 2009."

The lender previously reported a rise in house prices of 2.6% in May following three successive monthly falls. It said the ups and downs seen so far this year differed significantly from the consistent run of falls last year, indicating that the underlying rate of decline has eased.

There have been signs of small increases in activity in the housing market, with mortgage lending increasing and estate agents reporting greater interest. However, David Smith, senior partner at property consultancy Carter Jonas, said: "While the number of people committing to a purchase is rising, attracted by competitive mortgage finance and low prices, overall transaction numbers remain modest.